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GST “It Could Be Good For You”

SASKATCHEWAN INDIAN      NOVEMBER 1992      v21 n08 p12  
With the introduction of the Goods and Services Tax(GST) in 1991, many people who are conducting business with Indian people and their organizations understood that they - were exempt due to provisions of other legislation. As a result some businesses may not be registered for GST when they should be. In many cases virtually all the goods and services are provided to Indian people on reserve or Band and Tribal Councils who are required to pay the GST. Therefore, the registration of a business would not require the collection of GST and would not pose a real cost. However, by not registering for GST, tax which is recoverable would not be refunded. In order to get a refund of GST, there are a number of steps that must be considered.

First, if you are doing business and have gross revenue over $30,000 a year. you should have been registered for the GST when it originally came into effect January 1, 1991.. In this case you will want to register with the GST office and then file for any claims of GST paid in the past. If you were not required to be registered because your gross revenue was under $30,000, your ability to become registered and claim back GST is limited. In this case you can only recover the GST paid from the date that you become registered for GST. Therefore, businesses in this situation may wish to be registered as soon as possible to ensure that they are not losing the ability to recover GST paid now and in the future.

Second, once you have become registered for GST and are entitled to recover GST paid in expense, the next step is to keep track of those expenses and file the GST returns. This means that adequate accounting records must be kept including copies of invoices where the GST was paid. There are specific rules that indicate what information the invoices need to contain, depending on the dollar value of the purchase, to recover the GST.
 
The third step is to go back and review past revenues to determine if GST should have been collected. If GST should have been collected in the past and you were required to be registered for the GST, then you are responsible to make sure that the GST is forwarded to the government. In many cases where goods or services are provided to Indian people on reserve or Band and Tribal Councils, no GST would have had to be collected. If this is the majority of your revenue, you may likely not have ever had to collect GST on any activities. To make sure you have not missed sending GST collected to the government, a review of your past revenue should be done to ensure that they were tax free.

The types of business that may fall into this situation could be many, but a good example is a school bus operator. In this situation, a school bus operator providing services to a band school on a reserve, would not have to charge GST. However, all the GST paid on expenses (for example, repairs, fuel, new buses)
should then be recoverable. The GST paid could be very significant in some years when a new school bus is purchased and should be considered.

As with any area of taxation, the GST has may complications. Therefore, a careful review of your situation should be done before taking any actions. You are encouraged to contact a professional advisor to determine if registration for the GST would in fact be good for you.

By Tom Zurowski, C.A.
Edited by keith Martell, C.A.
peat Marwick Thorne,
Chartered Accountants